Ultralife 2025 Q2 Earnings Misses Targets as Net Income Slashes 70.9%

Ultralife (ULBI) reported mixed results for its fiscal 2025 Q2 earnings, with revenue rising but net income and EPS sharply declining. The company missed expectations in profitability despite a 13% year-over-year revenue increase. Management indicated no formal guidance adjustments but expressed cautious optimism about a second-half rebound.

Revenue

Ultralife’s total revenue for 2025 Q2 increased by 13.0% to $48.56 million, driven by the inclusion of Electrochem Solutions, Inc. (Electrochem) within its Battery & Energy Products segment, which saw a 25.0% year-over-year increase to $45.87 million. However, excluding Electrochem, Battery & Energy Products sales were essentially flat year-over-year. Communications Systems sales, on the other hand, fell sharply by 57.2% to $2.69 million due to delayed orders and prior-year shipment comparisons. The drop in Communications Systems sales was a drag on overall performance.

Earnings/Net Income

Ultralife’s earnings per share (EPS) dropped significantly to $0.05 in 2025 Q2 from $0.18 in the same period last year, representing a 72.2% decline. The company’s net income also plummeted to $870,000 in Q2 2025 from $2.99 million in Q2 2024, a 70.9% drop. The earnings shortfall was attributed to a weaker gross profit margin, driven by product mix shifts, higher tariffs, and lower factory throughput, alongside non-recurring costs.

Price Action

The stock price of Ultralife experienced mixed performance around the earnings release. Shares rose 7.46% on the day of the report but fell 15.06% during the following week and 22.98% month-to-date as of the reporting date.

Post-Earnings Price Action Review

A strategy of buying Ultralife shares 30 days after a quarter-over-quarter revenue increase on the earnings release date yielded no return over the past three years. The strategy had a compound annual growth rate (CAGR) of 0.00%, an excess return of -61.27%, and underperformed the benchmark significantly. The strategy’s maximum drawdown and volatility were both 0.00%, suggesting a risk-averse approach that failed to capitalize on potential gains.

CEO Commentary

Mike Manna, President and Chief Executive Officer, described the second quarter as challenging for Ultralife. Organic sales in the Battery & Energy Products segment were flat, while Communications Systems sales declined significantly due to delayed orders. Tariffs, product mix, and order timing negatively impacted gross profit. However, the company continued to invest in new product development and used proceeds from the Employee Retention Credit to prepay $2.7 million of acquisition debt. Manna expressed cautious optimism and emphasized a focus on converting new product development into revenue, maintaining operational efficiency, and maximizing brand value.

Guidance

Ultralife expects improved performance in the second half of 2025 and into 2026. The company cited a projected rebound in the Communications Systems business and early purchase orders for new battery programs as key drivers. Additionally, it anticipates increased demand from medical and oil & gas customers, sustained defense spending, and an expanding opportunity pipeline. No specific revenue or EPS guidance was provided.

Additional News

Recent company activity included the acquisition of Electrochem Solutions, Inc. in early 2025, which contributed significantly to the increased Battery & Energy Products revenue. Management noted that the inclusion of Electrochem was a strategic move to diversify offerings and expand market reach. Additionally, Ultralife used Employee Retention Credit proceeds to prepay $2.7 million of acquisition debt, exceeding its quarterly debt amortization requirement by $2.0 million. No recent dividend or share repurchase announcements were made, and there were no indications of C-level executive changes within the three-week period from the earnings release date.